OJR preliminary budget shows nearly 2% property tax hike

SOUTH COVENTRY — The Owen J. Roberts School Board recently reviewed a preliminary 2014-15 budget that would raise property taxes in the district by 1.98 percent if approved next month.

The budget keeps the tax hike within the state’s Act 1 inflation index of 2.1 percent, despite the fact that the district has faced significant budget challenges this year. Those challenges include a loss of over $2 million in income as a result of real estate assessment appeals from the Coventry Mall and two golf courses.

That loss of income was coupled with expenditure increases totaling $3.5 million. The majority of that, $2.9 million, is related to the district’s escalating state mandated contribution to the Public Schools Employee Retirement System Pennsylvania (PSERS). Set to increase by 4.47 percent over the 2013-14 school year, the district’s PSERS costs will represent 21.4 percent of its payroll next year.

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The PSERS cost alone accounts for 84 percent of the 2014-15 total preliminary budget increase of 4.02 percent over the current year, according to a presentation by the district’s Chief Financial Officer Jaclin Krumrine.

The district’s bad budget news didn’t end there. Federal subsidies and grants for Access, Title I and Title II funds decreased by $482,000. What’s more, the state’s new block grant format for subsidizing transportation costs will mean the district will receive $364,000 less in transportation funds.

Nevertheless, there was some good budget news, as well. Krumrine noted that there had been a slight uptick in earned income taxes. In addition to that, tax appeals from homeowners have leveled out, somewhat offsetting the major real estate tax reassessments from the Coventry Mall, Bellewood Golf and Country Club and Stonewall Golf Course, in Elverson.

There was also a $426,317 reduction in administrative costs, due primarily to a decrease in debt service costs. The district also saw a decrease of $445,000 in program costs, and another $381,000 was cut from operational costs, mostly as a result of energy conservation measures undertaken in district facilities, according to Krumrine.

However, she warned that the district would not see similar energy savings in coming years, as two elementary schools are being renovated and will have air conditioning installed.

By far the largest cost increase over the 2013-14 school year was a $4.6 million hike in personnel costs, primarily due to the PSERS contribution.

Overall, the preliminary 2014-15 general fund budget expenditures totaled $90,963,404, representing a 4.02 percent increase over the 2013-14 total of $87,444,359. Even with the 1.98 percent proposed tax hike, revenues for next year remain at only $89,577,690, leaving a spending gap of over $1 million.

That gap will be closed utilizing funds totaling $1,385,715 set aside in the district’s PSERS designated fund balance. That figure could be reduced “if the state budget includes a collar for employer PSERS contributions,” Krumrine said.

Because the district was prepared for the loss of revenue from the Coventry Mall, its 2014-15 budget was less hard hit than it would otherwise have been from the real estate assessment appeal. Earlier this year, the board approved a real estate tax appeal settlement with Coventry Retail, LP that lowers the assessed value of the Coventry Mall from $98 million in 2012 to $23.2 million in 2014. That equates to a loss of about $2 million in revenues a year.

However, since district officials had anticipated that loss, they had reserved over $1 million to help balance the 2014-15 budget. Therefore, the actual impact on the budget was only about $700,000, Krumrine explained.

Thus, the board was able to realize a balanced preliminary budget without cutting programs for 2014-15. However, that’s something that may prove even more difficult in future years.

“We’ve reduced all that we can reduce without impacting programs,” Krumrine said.

About the Author

Laura Catalano is a freelance writer whose work has appeared in books, magazines and newspapers. She is a frequent contributer to The Mercury, for which she writes news, features and a monthly column. She lives in Pottstown and works for the Schuylkill River Heritage Area. Reach the author at LauraC802@aol.com
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